BEST PRACTICES & RECOMMENDATIONS FOR OPTIMIZING YOUR FUEL MANAGEMENT PROGRAM

Transcription

1 WHITE PAPER WINTER 2015 BEST PRACTICES & RECOMMENDATIONS FOR OPTIMIZING YOUR FUEL MANAGEMENT PROGRAM LEASES

2 OVERVIEW In our ever-evolving landscape, optimizing cost-efficiency is one of the paramount priorities for the Fleet Manager. As fuel traditionally represents the largest or second largest expense for a fleet, an effectively managed fuel program is a necessity for any company aiming to maximize costefficiency opportunities. The fuel card can help managers validate vehicle and driver information, capture transactional data, analyze trends, and limit unauthorized purchases. Additionally, a successfully managed fuel program can ensure positive driver behavior, compliance with government regulations, and a reduction in a fleet s carbon footprint. The following practices and recommendations can help you more efficiently and effectively manage your fuel program. SELECTING APPROPRIATE CARD PROFILES AND RESTRICTIONS SETTING CARD TRANSACTION PROFILES Controlling the number of transactions allowed on each card per day can help you to ensure that only necessary transactions are taking place on all of What is the typical number of your fuel cards. When you set up your transactions that your company fuel card program, examine your history runs each day? of card transactions. If you have a fleet What is the average number of of sedans or light-duty trucks with fuel transactions across drivers? tank capacities of 15 to 30 gallons, your How often do exceptions purchasing profiles should be substantially happen that put you over those different than a fleet with medium or averages, and why do these heavy duty trucks that may have tank exceptions occur? capacities of 50 gallons and above. Make sure that your transaction limit is flexible enough to accommodate those exceptions, but not so high that exceptions won t go unnoticed. SETTING SMART DRIVER PROMPTS When setting up your cards, avoid using vehicle numbers or any other easily accessible code as the prompted ID (PIN) that your drivers enter when performing a transaction. This is done more often than one might think, and makes it easy for an unauthorized user to potentially access your fuel account. 2

3 Some FMC s incorporate data into their reporting; making it simple and easy for the fleet manager to view who was at the pump by the Driver ID. Pool vehicles are best managed by assigning the fuel card to an assigned vehicle and allowing for multiple PINs for an individual card. IMPLEMENTING THE PURCHASE AT PUMP RESTRICTION Your fuel cards can be configured to either transact both inside a fueling station and at the pump or exclusively at the pump. By selecting the at the pump restriction, you will minimize the opportunity for non-fuel purchases. Depending on the type of purchase, you may not have the opportunity to dispute the transaction if this restriction is not elected. With this restriction you will always have the option to authorize a one-time override in the event that a driver needs to purchase fuel inside of a station. MONITORING FUEL GRADE AND TYPE CONSUMPTION Regular Fuel: Most fleet vehicles require only regular unleaded gasoline. Premium Fuel: Premium fuels carry higher Choose the appropriate octane ratings; a measure of the volatility in the vehicle for the job it will combustion chamber. Despite popular belief be performing to reduce that premium fuel adds to fuel efficiency, the total fuel spend. cost savings of it are almost never realized. Premium fuel should only be used when the vehicle s manufacturer requires it, as this savings on average can amount to approximately 10 cents per gallon. Midgrade Fuel: As the same with premium fuel, midgrade fuel should only be used if required by the manufacturer. Diesel Fuel: Typically, diesel engines are more fuel efficient than their gasoline counterparts. However, the engines and maintenance for these types of vehicles can be a larger investment. Monitoring diesel fuel spend and MPG, in conjunction with the additional fixed and variable costs associated with diesel powered assets, is critical to managing the vehicles return on investment. Diesel Exhaust Fluid (DEF): It is critical to keep an eye on DEF levels. Starting in 2010, diesel engines require DEF. DEF is not a fuel additive that comes in contact with diesel fuel but is stored in a seperate tank. DEF is injected into the diesel engine to break down the NOx emissions produced 3

4 by the engine into water and nitrogen. If a diesel powered vehicle runs out of DEF, the vehicle will be limited to 5mph until the DEF tank is refilled. There are many ways to manage your spend by fuel grade and type: Driver ID integration allowing identification of point of sale behaviors Exception reports to manage and improve fleet wide compliance Dashboard reports to monitor near and long term trends Real-time driver alerts with integrated processes to manage behavior in the field FUEL TRANSACTIONAL DATA In order to ensure you are selecting the appropriate fuel network restriction for your fuel cards, you should determine your need for card security and mileage data. All fueling stations in the country are classified by the level of data that they capture and report at the time of the transaction. Level I and Level II networks are similar in the types of data recorded, but only Level III compatible stations are required to prompt your driver for their unique PIN and odometer reading when fueling. Selecting a Level III restriction on your cards is a card-specific setting that can improve the overall security of your cards and record updated mileage, which is essential for providing you with valuable reporting data. Leveraging Purchasing Reporting & Alerts REVIEWING EXCEPTION REPORTING After your cards have been distributed and are in use, you can monitor your fleet s fuel consumption by utilizing fuel management reports available through your fleet management company. There are a suite of reports to help you effectively manage your fleet and improve driver behavior. In addition to leveraging exception reports to monitor fuel consumption trends like non-fuel purchases and fuel grade type, it is recommended to use an over-tank capacity report and off-hours purchases report. Respectively, the over-tank capacity report is a powerful tool that can identify if fuel 4

5 transactions exceeding the known tank capacities of your vehicles are occurring, which is typically an indicator that your cards are being utilized in unauthorized vehicles. The off-hours purchases report monitors card usage behavior for transactions that occur outside of general business hours. FACTORING FUEL PRICES Monitoring fuel prices is an important strategy that can be leveraged to help you direct your drivers towards the most cost-effective fueling locations. It s vital that your FMC can provide reports that will allow you to view your fleet s utilization by vendor, along with an average cost per gallon and average cost per transaction. This information can help you effectively direct your drivers to the fueling stations offering the lowest prices. Driver Policy Implementation and Promoting Positive Behavior AVOIDING AGGRESSIVE DRIVING AND MODIFYING BEHAVIOR According to the U.S. Department of Energy, aggressive driving can reduce highway fuel efficiency by 33 percent and city efficiency by 5 percent. Aggressive driving includes harsh acceleration, abrupt braking, speeding, tailgating, and weaving in and out of traffic; these actions will cause all vehicle parts to wear out more quickly and could jeopardize your company s reputation. Moderate acceleration, gradual braking, and maintaining the speed limit will reduce the amount of fuel consumed. PROMOTING REDUCTIONS IN IDLE TIME While some vehicle idling is difficult to avoid, most is avoidable and contributes to unnecessary fuel consumption. An idling car can waste up to.5 gallon per hour. The Argonne National Laboratory estimates that nearly 6 billion gallons of gasoline and diesel are consumed due to vehicle idling 5

6 each year, which translates to over $20 billion dollars (based on a $3.50 average). 1 In addition to fuel waste, lowering your idle time can contribute to the reduction of emissions and a fleet s overall carbon footprint. CRUISE CONTROL While driving on the highway, encourage drivers to use their cruise control. An inconsistent speed directly affects your vehicles miles per gallon. Cruise control allows drivers to keep a steady speed, which in turn will reduce fuel consumption. Leveraging Technology and Supporting Programs CONSIDERING TELEMATICS Educating drivers on the driving behaviors that contribute to increased gas consumption and introducing ways to improve current driving behaviors is essential to enhancing fuel efficiency. The most common driver behaviors that contribute to enhancing fuel efficiency are speeding and idling. Using technologies such as telematics/gps, fleet managers now have the ability to address driver behaviors that pose safety concerns and directly impact the bottom line. An additional use of telematics to drive cost reduction is targeted routing via use of Turn-by Turn Directions; a more direct route can reduce overall fuel consumption. UTILIZING A MAINTENANCE PROGRAM Standard preventative vehicle maintenance can significantly improve fuel economy and lower overall operating costs. Studies have shown that proper vehicle maintenance can improve fuel economy up to 40%. An effective maintenance management program can assist with ensuring that vehicles receive consistent preventative service. 1 Argonne Lab Overview Argonne Lab Idle Reduction Research 6

7 IMPLEMENTING AN INCENTIVE OR RECOGNITION PROGRAM One method to further entice acceptable driver behavior is the introduction of employee incentive programs and organization wide contests for demonstrating decreased fuel consumption practices and safe driving. Best in class fleets that are able to implement an incentive program coupled with fuel best practices typically see a 5-10% fuel savings. Telematics Driver behavior Routing Maintenance Preventative maintenance Recognition Contests Awards Conclusion An effectively managed and efficient fuel program does not need to be overly complicated or difficult to facilitate. Experience has found that an impactful fuel program needs to be managed through a combination of quality reporting tools, fleet specific card settings and restrictions, effective driver policies, and most importantly, a partnership with a team who can provide you with targeted and meaningful consultation. 7